CRPC Required Minimum Distributions and Beneficiary Planning 3

Question 1

What is the Net Unrealized Appreciation (NUA) strategy available with employer retirement plans?

Accepted Answer

A technique allowing employer stock distributed in-kind from a qualified plan to have its appreciation taxed at long-term capital gains rates rather than ordinary income rates

Answer

A method of rebalancing a 401(k) to capture gains in appreciated securities

Answer

An IRS calculation for determining the growth portion of a Roth conversion

Answer

A strategy for minimizing RMDs by rolling over plan assets to an IRA

Question 2

What is a Qualified Charitable Distribution (QCD) and how does it interact with an RMD?

Accepted Answer

A direct transfer from an IRA to a qualified charity (up to the annual limit) that counts toward the RMD and is excluded from taxable income

Answer

A charitable deduction taken when converting a traditional IRA to a Roth IRA

Answer

A charitable contribution made with after-tax IRA funds that qualifies for a deduction

Answer

A distribution from a qualified plan to fund a charitable remainder trust

Question 3

What is the annual QCD limit per taxpayer in 2024 after SECURE 2.0's inflation indexing provision took effect?

Accepted Answer

$105,000

Answer

$50,000

Answer

$75,000

Answer

$100,000

Question 4

What is the 'separate account rule' for inherited IRAs, and why is it important for planning?

Accepted Answer

A rule that, when met by December 31 of the year following the owner's death, allows each beneficiary to use their own life expectancy for distribution calculations

Answer

A rule requiring each beneficiary to open a separate account within 30 days of inheriting

Answer

An IRS rule prohibiting commingling of inherited IRA funds with the beneficiary's own retirement assets

Answer

A rule requiring custodians to maintain separate tax reporting for each named beneficiary

Question 5

What is the significance of the 'September 30 deadline' in inherited IRA beneficiary planning?

Accepted Answer

The date by which non-individual beneficiaries must be cashed out so remaining individuals can use life expectancy-based distributions

Answer

The deadline for the estate to pay income taxes on IRA distributions from the year of death

Answer

The deadline for the surviving spouse to elect to roll over an inherited IRA into their own name

Answer

The date by which annual RMDs must be distributed from an inherited IRA

Question 6

How does a Roth IRA conversion interact with an account owner's required minimum distribution obligation for that year?

Accepted Answer

RMDs must be fully taken before any Roth conversion can occur, and RMD amounts themselves cannot be converted

Answer

RMD amounts can be converted to a Roth IRA, satisfying both the RMD and enabling tax-free growth

Answer

A Roth conversion satisfies the RMD requirement for the year of conversion

Answer

Roth conversions are prohibited in any year after the account owner's Required Beginning Date

Question 7

What is a 'conduit trust' in the context of naming a trust as a retirement plan beneficiary?

Accepted Answer

A trust that receives IRA distributions and immediately passes them through to the trust's current beneficiaries

Answer

A trust that accumulates IRA distributions inside the trust until a specified triggering event

Answer

A special purpose trust used exclusively for charitable distributions from IRAs

Answer

A trust that converts IRA distributions to tax-exempt income for its beneficiaries